Tuesday, September 15, 2009

Is the decline in spending permanent?

John Mauldin draws inference from the growing gap between essential, and non-essential spending:
A gap this wide looks like a real structural shift in spending behavior, as austerity becomes the new normal. Though Americans have shaken off bouts of prudence before, like that of the early 1990s, with consumer credit constricted, household balance sheets ravaged, and labor income weak, it's probably going to take some time before anything resembling extravagance returns. 

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